The New York Times says that while so-called brain exercises (like Sudoku or computer applications…
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The study got 60 sedentary adults aged 60 to 80 to start a brisk walking program of 40 minutes a day three times a week. After a year, MRIs showed the hippocampus region of these exercisers had increased by about 2%. The walkers also had better performance on memory tests, compared to their scores at the start of the study—an improvement associated with the larger hippocampus.

It seems that brisk walking or moderate aerobic exercise is better than just any activity: the hippocampus brain region for a control group of participants who instead did stretching and toning exercises decreased in volume by 1.4%.

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Whether or not our brains shrink naturally with age (something scientists have debated), this is the first time the brain has been shown to be modifiable late in life, even reversing brain shrinkage (all of the participants had some degree of brain shrinkage). Regular exercise may be able to reduce the risk of Alzheimers' disease.